Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://southasiainvestor.blogspot.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ

Saturday, September 5, 2009

UNDP Reports Pakistan Poverty Declined to 17%

Center for Poverty Reduction (CPRSPD), backed by the United Nations Development Program(UNDP), has estimated that Pakistan's poverty at national level declined sharply from 22.3 percent in 2005-06 (versus India's poverty rate of 42%) to 17.2 percent in 2007-08. Prior to this report, the 2009 UN Human and Income Poverty Report said the people living under $1.25 a day in India is 41.6 percent, about twice as much as Pakistan's 22.6 percent. The latest poverty estimate of 17.2% has been validated by the World Bank.It should not be a big surprise, given the close relationship between poverty reduction and robust economic growth that Pakistan saw from 2005-06 to 2007-08. The economic slowdown has only occurred in 2008-09, which appears to have resulted in some visible poverty increase on the ground since the middle of last year. However, there seems to be a deliberate effort being made by some politically motivated Pakistani economists and politicians to delay the release of CPDSPD data and deny what Dr. Ashfaq Khan of NUST calls "the major economic and social achievements of the last one decade" under President Musharraf. Dr. Khan cites the Letter of Intent that the PPP government signed with the IMF which acknowledged that Pakistan's GDP jumped "from $60 billion in 2000-01 to $170 billion in 2007-08 with per capita income rising from under $500 to over $1000". The LOI with IMF also acknowledged that "Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. The government's debt fell from 68% of GDP in 2003-04 to less than 55% in 2006-07, and its foreign-exchange reserves reached $16.4 billion as recently as in October (2008)." Here's an interesting OpEd published in the News by Dr Ashfaque H Khan on how poverty statistics in Pakistan are fair game for the various "experts" with an ax to grind:

The present government is facing real embarrassment on poverty estimates for 2007-08. The Panel of Economists, formed by the government in April 2008 under the leadership of Dr Hafiz Pasha, found that 35-40 percent people of Pakistan were living below the poverty line in 2007-08 – up from 22.3 percent in 2005-06. The political leadership, unaware of the technical details of the estimation techniques, took the estimates of the Panel seriously and everybody, including the ministers, the prime minister and the president started mentioning the numbers within and outside the country. The political leadership had no reason to distrust the professional skills of the Panel of Economists. Their only fault was that they could not realize that some members of the Panel of Economists were positioning themselves to get ministerial jobs and some retired "experts" were trying to secure their jobs in the government. These people could have moved their way to the present regime only if they would paint a bleak picture of the state of the economy, including the substantial rise in poverty. I am positive that this Panel of Economists has had no courage to write similar three paragraphs as documented in the Memorandum of Economic and Financial Policies attached with the Letter of Intent, signed by the Government of Pakistan on Nov 20, 2008 with the IMF. These three paragraphs, written by the present regime, very aptly summarize the major economic and social achievements of the last one decade, including the "reduction in poverty and an improvement in many social indicators." It appears that the Panel of Economists was trying to become more Christian than the Pope and as such came up with poverty estimates based on flawed methodology.On the other hand, the Centre for Poverty Reduction and Social Policy Development (CPRSPD), using the(Pakistan Social and Living Standards Measurement (PSLM) Survey 2007-08, also estimated poverty for the year 2007-08. They found that poverty at national level declined sharply from 22.3 percent in 2005-06 to 17.2 percent in 2007-08. Poverty, both in rural and urban areas also registered sharp declines. The estimates of the CPRSPD were also validated by the experts from the World Bank. The "experts" from the Planning Commission are of the view that a sharp decline in poverty in 2007-08 does not depict the ground reality. Why should it depict the ground reality? Firstly, the period it covers is from July 2007 to June 2008. Secondly, poverty estimates are not like the growth number, money supply or inflation which change yearly. Poverty number reflects the changes in the lives of the people which are affected by the policies pursued for a fairly long period of time. To be fair to the government, how can they say now that the poverty in Pakistan has declined substantially in 2007-08 as opposed to their earlier stance that it had increased to the range of 35-40 percent? In other words, how can they say that at the time of taking charge of the state of affairs only 17.2 percent people were living below the poverty line and that there are indications that poverty is on the rise once again in Pakistan. This is indeed the real embarrassment for the government caused by the Panel of Economists.

Poverty estimates are highly sensitive to changes in different variables. For example, should we use calorie intake or basic need approach or should we use 2550, 2250 or 2350 calorie to draw the poverty line? Should we use CPI, SPI, WPI or prices derived from the Survey itself to adjust the poverty line or should we use consumption or income? The basket of commodities may differ across researchers and even the cleaning protocol of data may give different poverty estimates. Thus, at any given point in time there can be different poverty estimates with same or different data sets. What is required, therefore, is that we continue to use the same methodology irrespective of its strength and weaknesses, lest we should never be able to know as to what is happening on poverty front.

There are views about the methodology used by the Panel of Economists. One, that in the absence of PSLM Survey data for 2007-08 the Panel simply adjusted the poverty line upward to the extent of cumulative inflation (20 percent) for the period 2006-07 and 2007-08. On the other hand, they used household consumption expenditure for the year 2005-06, which was not adjusted upward to match the poverty line. In other words, apple was compared with orange. Naturally, such a flawed methodology was bound to produce erroneous results. Second, that the Panel used an equation to forecast poverty. This equation has many exogenous variables, such as food inflation, remittances, openness of trade, development expenditure as percentage of GDP, etc. Giving the value of each variable for 2007-08 and using the estimated parameters it predicted poverty for 2007-08. Forecasting is a complex exercise and requires transparency in the use of data. The Panel did not release those numbers which went into the model. Thirdly, they used the preliminary version of the model whose parameters changed substantially in subsequent revisions. The Panel never bothered to contact the author of the model. Had they contacted him, he could have saved the Panel from such disgrace.

At the end, let me once again appeal to the Planning Commission to release the poverty numbers for 2007-08. Not releasing the number is not a good idea. The number is already out. Don't embarrass the government any more. Forget the Panel's report and trust your own young economists at the CPRSPD.

The author is dean and professor at NUST Business School, Islamabad. Email: ahkhan@nims.edu.pk

42 comments:

Though it’s still early, it appears that Pakistan has begun to reap some of the benefits of the large talent pool created by 5X higher HEC funding, the creation of the high speed Internet and digital library etc. as part of the higher ed reform.

According to oDesk, Pakistan experienced 328% growth in its outsourcing business in 2007-8, second only to the Philippines (789%) on a list of seven top locations that include US (260%), Canada (121%), India (113%), the Ukraine (77%) and Russia (43%).

Pakistan ranks number one in value for money for developers and data entry and number two overall behind the Philippines where the cost of answering calls is about half of the cost in Pakistan. Pakistan is well ahead of India and just behind the number 1 ranked United States in customer satisfaction.

Because of the robust economic growth in the last few years and the creation of millions of jobs, Pakistan’s poverty rate declined significantly (from 22% in 2005-06 to 17% in 2007-8, although poverty seems to be rising again in 2008-09) partly due to the FDI brought in to take advantage of the larger number of college grads.You can read more at http://www.riazhaq.com/2009/01/pakistan-ranks-amon g-top-outsourcing.html

and http://southasiainvestor.blogspot.com/2009/09/paki stan-poverty-down-to-17-in-2007.html

One of the ways Pakistani economy manages to stay afloat is by increasing remittances coming from overseas Pakistanis.

According to the Nation newspaper, Pakistan received the highest-ever amount of over $7.811 billion as expatriate’s remittances in the recently concluded 2008-09 fiscal year (FY09), beating the previous record of $6.451 billion received in the preceding 2007-08 fiscal year (FY08).In FY09 workers’ remittances showed an increase of 21.08 percent, or $1.36 billion, when compared with FY08. The amount of $7.811 billion includes $0.48 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).The monthly average remittances in the period from July 2008 to June 2009 comes out to $650.95 million as compared to $537.60 million during the same corresponding period of the 2007-08 fiscal year, registering an increase of 21.08 percent.The inflow of remittances in the July 2008 to June 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,735.87 million, $1,688.59 million, $1,559.56 million, $1,202.65 million, $605.69 million and $247.66 million respectively, as compared to $1,762.03 million, $1,090.30 million, $1,251.32 million, $983.39 million, $458.87 million and $176.64 million respectively, in the July 2007 to June 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during FY09 amounted to $771.03 million as against $726.29 million in FY08.During the last month (June 2009), Pakistani workers remitted an amount of $735.17 million, up $187.76 million or 34.30 percent when compared with an amount of $547.41 million sent home in June 2008. The amount remitted in June 2009 is the second-highest received in a single month after $739.43 million sent home in March 2009.The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to June, 2008. According to the break up, remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $164.70 million, $154.39 million, $152.33 million, $108.11 million, $68.48 million and $22.95m respectively, as compared to corresponding receipts from the respective countries during June, 2008 i.e. $88.29m, $143.57m, $123.67 million, $90.98m, $38.08m and $13.98m. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during June 2009 amounted to $64.19m compared to $48.80m during June 2008.

If u read carefully it has come down from 64% and whereas india was at 51.3% when the yard stick comparision

Pakistan has moved 74 million people above poverty level and india has moved 113 million during the same period.

Probably india was never on the favourable list of donor for the last sixty years and hence it has to mend for itself. Where as pakistan had the advantage of getting large aid from USA and oil rich countries of gcc.

As of 2009 india is considered the important country to bail the world out of recession and not pakistan. On the contrary pakistan is looked upon as a rogue nuclear country.

Anon:"Where as pakistan had the advantage of getting large aid from USA and oil rich countries of gcc."

India receives far more aid than Pakistan. If aid could bring down poverty than India and Africa would have far less poverty than Pakistan. Please read this post: http://www.riazhaq.com/2009/04/foreign-aid-continues-to-pour-in-india.html

Anon: "As of 2009 india is considered the important country to bail the world out of recession and not pakistan. On the contrary pakistan is looked upon as a rogue nuclear country."

I think you are smoking dope. It is China, not India, that the US is counting on to rescue the world economy. Forget Chinindia. It's Chinamerica. Read the following post: http://www.riazhaq.com/2009/03/forget-chinindia-its-chimerica-to.html

The Export revenues are estimated to gross USD 47.3 billion in FY2009, accounting for 66 per cent of the total IT-BPO industry revenues.

While the US with a 60 per cent share remains the largest export market for Indian IT-BPO services, incremental growth is being driven by the European market, with UK and Continental Europe growing by a CAGR of 41.4 per cent and 51.4 per cent in the period FY2004-FY2008.==================================

Happy to know more about the number of pakistan and probably india could learn few for it follow where ever if required.

Further the reason many firms opt for indian companies including usa is that they have gather and organized knowledge of thousand of people over a period of 10 years. Take for example wipro it has approximately 100,000 staff on board and they have build in approximately half million man years knowledge at its disposal. After knowledge is power. Further all will agree that the maintenance is more expensive then creating or buying and indians are only doing the maintenance.[sad part that india is yet to move to products ] Further that is the reason that the american fall has not affected the business to that extent.

On googling i reached the site of worldbank where they have given the details about every economy and doing business with that country.

Following url gives that of pakistan as of 2007. It has not been updated then.http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,contentMDK:20891530~pagePK:146736~piPK:146830~theSitePK:223547,00.html

Above facts are self explanatory on the advantage of india compared to the other countries.

http://www.doingbusiness.org/subnational/Media/Media.aspx

Other countries which are given details presentation . reports are as under :

PresentationsDoing Business in India (PPT, 2.7MB)Doing Business in Veneto 2009 (PPT, 1.1MB), in Italian (PPT, 1.1MB)Doing Business in South East Europe (PPT, 3.5MB)Doing Business in the Philippines (PPT, 2.5MB)Doing Business in Nigeria (PPT, 440KB)Doing Business in China, introduction by Penelope Brook (PPT, 0.95MB)Doing Business in China, presentation of findings (PPT, 1.1MB)Doing Business in Colombia (PPT in Spanish, 1.2MB)Doing Business in Egypt (PPT, 1.2MB)Doing Business in Morocco (PPT, 2.1MB)About the subnational project (PPT, 1.0MB

India's GDP is only a third of China's GDP and there is growing gap in economic growth between the two, India has a lot more to worry about than just a few billions in IT exports from Bangalore.

All of India's growth forecasts are based on the perfect scenarios where they assume they can continue to command the current share of the growing offshoring business. It can only happen if India has the quality of labor to fill the potential jobs while competing with many new players in the market who are hungrier for these jobs.

There are a number of reports produced by McKinsey, Booz Allen, MIT and others on this subject that are available online.

Anon: "While the US with a 60 per cent share remains the largest export market for Indian IT-BPO services, incremental growth is being driven by the European market, with UK and Continental Europe growing by a CAGR of 41.4 per cent and 51.4 per cent in the period FY2004-FY2008."

When a bigoted India lover like Zakaria admits there is a problem in "peaceful, stable and prosperous" India, there must really be a serious problem.

India accounts for 65% of all IT work performed offshore. This is largely thanks to its seemingly limitless supply of low-cost engineers and other professionals.

Yet, not all is as it seems. India produces 400,000 engineering graduates a year (five times as many as the United States) and a stunning 2.5 million university graduates overall. Yet only about a quarter of India's college graduates are up to snuff. The odds at top Indian companies are even worse. Some 1.3 million people applied to tech-services giant Infosys last year. Fewer than 2% of those were employable.

Graduates of non-elite schools suffer from weak English skills. The quality of faculty and courses is sub-par. In-house training programs for new recruits at top Indian IT services firms such as Infosys (INFY), Genpact, and Tata Consultancy Services fill some of the gaps. But by 2010, India will have a shortfall of 150,000 IT engineers and 350,000 business-process staff.

Meanwhile, India's GDP is only a third of China's GDP and there is growing gap in economic growth between the two, India has a lot more to worry about than just a few billions in IT exports from Bangalore.

All of India's growth forecasts are based on the perfect scenarios where they assume they can continue to command the current share of the growing offshoring business. It can only happen if India has the quality of labor to fill the potential jobs while competing with many new players in the market who are hungrier for these jobs.

There are a number of reports produced by McKinsey, Booz Allen, MIT and others on this subject that are available online.

PPP numbers are highly subjective and you can understand them better if you go to ICP (International Comparison Program) website at http://www.adb.org/Documents/Reports/ICP-Purchasing-Power-Expenditures/default.asp

Look at the nominal GDP which is real hard currency. Please check the following: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

Even if you go by CIA numbers, China's GDP is 4.22 trillion vs India's 1.23 trillion

Jaisalmer: In the past four years, some 5,000 Hindus may have crossed over from Pakistan, never to return. It has not been easy, abandoning their homes, sometimes even their families, but they say they had no choice: they had to flee the Taliban. It started as a trickle in 2006, the year the Thar Express was flagged off. The weekly train starts from Karachi ,enters India at Munabaoa border town in Barmerand runs up to Jodhpur. In the first year itself, 392 Hindus crossed over. This grew to 880 in 2007. Last year, the number was 1,240, and this year, till August, over 1,000 have crossed over and not gone back.They keep extending their visas and hope to become Indian citizens. Incidentally, these are official figures. Sources say there are many more who cross over and melt in the local milieu. And officials have a soft corner for these people, most of whom have harrowing stories to tell. Ranaram, who used to live in the Rahimyar district of Pakistans Punjab , says he fell prey to the Taliban. His wife was kidnapped, raped and forcibly converted to Islam. His two daughters were also forcibly converted . Ranaram, too, had to accept Islam for fear of his life. He thought it best to flee with his two daughters after his wife was untraceable. Dungaram, another migrant, says the atrocity against Hindus in Pakistan has increased in the past two years after the ouster of Pervez Musharraf. Fanatics have become very active... We were not entitled to permanent jobs unless we converted to Islam. Hindu Singh Sodha, president of the Seemant Lok Sangathan (SLS)a group working for the refugees in Barmer and Jaisalmersays theres unfortunately no proper refugee policy in India even though people from Pakistan reach here in large numbers. The government of India has rarely raised the issue of atrocities against Hindus during the bilateral talks with Pakistan, said Sodha. He said in 2004-05 , over 135 families were given Indian citizenship but the rest were still living illegally in the country and were often tortured by police because they didnt have proper citizenship certificates. In December 2008, over 200 Hindus were converted to Islam in Mirpur Khas town of Pakistan. But there are several others who want to stick to their religion but theres no safety for them in Pakistan, he added.

Horror Story

Ranarams wife was kidnapped, raped and forcibly converted to Islam in Punjab province. He and his 2 daughters were forcibly converted. Ranaram fled with his kids; his wife is untraced

ESCAPE FROM FUNDAMENTALISM: Hindu migrants from Pakistan near Barmer

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Bangalore: EMC Corp on Wednesday announced a $1.5 billion investment in India over the next five years, marking a big bright spot in the IT sector that has been one of the most badly hit by the global recession. Company CFO David Goulden, who made the announcement in Bangalore, said the investment represents a three-fold increase over the investment made by EMC in India over the previous five years. The information infrastructure company has invested $500 million between 2006 and now, mostly in Bangalore. This is the largest investment that we have committed outside the US, Goulden said. The new investments will go into three areas: expanding R&D infrastructure at the centre of excellence (CoE) in Bangalore; increasing EMC Global Services capabilities at the CoE; and adding more technologists to drive deeper levels of engagement and support for local customers and partners. On Wednesday, the company inaugurated a new 4.95-lakh sqft facility on the outer ring road near Marathahalli that will not only bring together operations that currently function out of four separate locations but also create additional space. It has the capacity to seat 3,500 people. EMC India currently has a little over 2,000 employees. In a measure of the importance EMC attaches to its India operations, Goulden was accompanied in his visit to Bangalore by Sanjay Mirchandani , chief information officer, Mark Sorenson, senior VP (storage software group), Jack Mollen, head of HR, Gary Baty, VP (HR) for Asia-Pacific & Japan, Steve Leonard, president of Asia-Pacific & Japan, and John Herrera, VP in the office of globalisation. EMC focusses on next generation virtualised data centres, cloud computing, virtualised desktops and clients, and next generation backup, recovery and archive solutions.

According to the News, here is the PPP government's spin on not including the 17.2% poverty estimate for 2007-08 in the survey:

He (Shaukat Tarin) was also asked why the government has not included the 17.2 per cent poverty figure of 2007-08 worked out by the Centre for the Poverty Reduction and Social Policy Development (CPRSPD) and validated by the World Bank. In response, Tarin said that while the WB has validated the 17.2 per cent poverty figure there are indications that in the last quarter of 2007-08, poverty surged and we have initiated the rapid survey to this effect which would come up with a final poverty figure after a three-month period.

However, he said that estimates are that the poverty figure would stand at over 30 per cent during the last fiscal year. He also argued that people are committing suicide and selling their kids because of poverty, so obviously the poverty figure of 17.2 per cent needed to be closer to reality.

Here is more of the News story on 2008-09 economic survey:

The government has missed virtually every main macro-economic target set in the budget 2008-09 for the outgoing fiscal. This includes the projected 5.5 per cent GDP growth, 12 per cent inflation, Rs1,250 billion revenue and per capita income of 1,085 dollars, reveals the Economic Survey for 2008-09 released here by Adviser to Prime Minister on Finance Shaukat Tarin.

The survey states that Pakistan’s GDP growth has been estimated at 2 per cent for the current fiscal as against the original 5.5 per cent target, which was then revised to 3.5 per cent and further clipped to 2.5 per cent as agreed with the IMF. Likewise, the inflation target was fixed at 12 per cent by the government in the budget for the current fiscal, which in reality stood at 22.3 per cent in the first 10 months of 2008-09. “Per capita income in dollar terms rose from the finalised figure of $1,042 last year to $1,046 in 2008-09, showing a marginal increase of 0.3 per cent.” However, in last year’s Economic Survey the target of per capita income was $1,085, which has come down to $1,042.

The revenue target was fixed in the budget at Rs1,250 billion and was irrationally revised upward by the government to Rs1,360 billion, then revised downwards to Rs1,300 billion and yet again reduced to Rs1,180 billion, which also seems impossible to achieve.

However, Adviser to Prime Minister on Finance Shaukat Tarin said during a press conference here on Thursday that the country’s real GDP grew by 2 per cent in 2008-09 against a target of 4.1 per cent.

He said that the 2 per cent economic growth was a result of four shocks, which include macro-economic imbalances, external trade shocks, the global economic crisis and domestic security issues. He mentioned that when the present government took charge, Pakistan’s balance of payments, current account deficit and trade deficit were in the danger zone, but have now improved after joining the IMF programme. He said that the government had consolidated the economy in the current fiscal and was now ready for a growth-oriented budget to be announced on June 13.

Anon: "Even in india the gap between the rich and the poor is increase or even the middle class and the poor is increasing."

According to the new UN-HABITAT report on the State of the World's Cities 2008/9: Harmonious Cities, China has the highest level of consumption inequality based on Gini Coefficient in the Asia region, higher than Pakistan (0.298), Bangladesh (0.318), India (0.325), and Indonesia (0.343), among others." Gini coefficient is defined as a ratio with values between 0 and 1: A low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income).

A new British government report on child hunger and malnutrition in India is an "economic powerhouse" but a "nutritional weakling". Here is an excerpt from Times online story:

India is condemning another generation to brain damage, poor education and early death by failing to meet its targets for tackling the malnutrition that affects almost half of its children, a study backed by the British Government concluded yesterday.

The country is an “economic powerhouse but a nutritional weakling”, said the report by the British-based Institute of Development Studies (IDS), which incorporated papers by more than 20 India analysts. It said that despite India’s recent economic boom, at least 46 per cent of children up to the age of 3 still suffer from malnutrition, making the country home to a third of the world’s malnourished children. The UN defines malnutrition as a state in which an individual can no longer maintain natural bodily capacities such as growth, pregnancy, lactation, learning abilities, physical work and resisting and recovering from disease.

In 2001, India committed to the UN Millennium Development Goal of halving its number of hungry by 2015. China has already met its target. India, though, will not meet its goal until 2043, based on its current rate of progress, the IDS report concluded.

“It’s the contrast between India’s fantastic economic growth and its persistent malnutrition which is so shocking,” Lawrence Haddad, director of the IDS, told The Times. He said that an average of 6,000 children died every day in India; 2,000-3,000 of them from malnutrition.

Bangalore: The business environment in Pakistan and Bangladesh is far better than in India. According to the latest 'Doing Business Index', India's business environment has become tougher during the years compared to other nations.

Economies are ranked from one to 183 on the basis of their regulatory environment being conducive to business operations. All of India's neighbors except Afghanistan have been ranked better. While India is ranked 133, Pakistan is ranked 85th followed by Sri Lanka (105), Bangladesh (119) and Nepal (123).

"India is a consistent reformer for the past many years. A country's rank in the index is an average of 10 indicators, each with 10 percent weight in the index. India increased the number of judges in the specialized debt recovery tribunals, which led to a major removal of blockages. While India reformed in the area of insolvency, other countries reformed in more than one area," World Bank's Senior Strategy Advisor, Dahlia Khalifa told Economic Times explaining why India has been overtaken by other nations.

The 2010 Doing Business Report prepared by World Bank and the International Finance Corporation averages a country's percentile ranking on 10 topics, made up of a variety of indicators. This includes examining a country's business environment in terms of starting a business, dealing with construction permit, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

The first place is occupied by Singapore, which is followed by New Zealand, Hong Kong and the U.S.

To see complete rankings and report, click here: http://www.doingbusiness.org/EconomyRankings/"

Here's a Dawn story about the duplicity of Pakistan's "democratic leaders" published Jan 16, 2009:

ISLAMABAD: While publicly it criticizes former President Musharraf for the present economic mess, the government in its official documents has appreciated the economic policies of the previous regime that became a strong base for seeking loans from multilateral donors and friends of Pakistan.

The PPP-led coalition partners have been blaming Musharraf regime in public speeches for fudging economic figures to paint a rosy picture, while its overall policies pushed the country into economic crisis.

The letter of intent (LoI), on the basis of which, Pakistan sought the much-needed $7.6 billion bailout package from the International Monitory Fund (IMF), has bit by bit appreciated the Musharraf policies since 2000.

During the past one decade (1999-2007), the LoI says Pakistan’s economy witnessed a major economic transformation from substantial increase in the volume of gross domestic product (GDP) to greater international trade.

Talking to Dawn on Thursday former Finance Minister Ishaq Dar said whatever he said about the health of economy was based on the balance sheet existed on March 31, 2008. He said the balance sheet was dully approved by the then cabinet headed by Prime Minister Syed Yousuf Raza Gilani.

He said no body denied the contents of the balance sheet. The focus of the previous economic policy was on promotion of consumerism without supporting the industrial base.

Apparently not willing to agree with the LoI contents, he said though he has a different view of the past economic growth but quickly added the same was destroyed in the last 15 months of the military led dictator.

An official source requesting not to be named said the economic wizards in the finance ministry are not politicians to make only speeches but they have to look into ground realities. ‘We reported to IMF whatever is factual and based on evidence,’ the official added.

The LoI said the country’s real GDP increased from $60 billion in 2000-01 to $170 billion in 2007-08 with per capital income rising from under $500 to over $1000. During the same period, the volume of international trade increased to nearly $60 billion from $20 billion.

For most of this period, real GDP grew at more than 7 per cent a year with relative price stability. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Buoyant output growth, low inflation, and the government’s social policies contributed to a reduction in poverty and an improvement in many social indicators.

Former Finance Minister Dr Salman Shah told this scribe the government has made the 170 million people fool while telling them pack of lies in the past nine months about the economic policies of the Mushrraf regime.

He said that as the present government acknowledged in black and white, the impressive past growth made their way easier to make access to the new facility of the IMF for emerging markets hit by the crisis to support the balance of payment problems.

Had growth not been achieved, Pakistan would have to apply for other long term IMF financing facilities like poverty reduction, structural adjustments etc, Shah said adding government should tell truth to the nation if they have confidence.

‘The recruitment made so far for running the finances of this country is very depressing. This shows this government has neither commitment nor capabilities to take the country out of the current crisis,’ Dr Salman said.

Here's an IMF official talking to Business Recorder about Pakistan's economy growing 5-8% in future years:

ISLAMABAD (February 25 2010): The biggest challenge Pakistan facing now is to improve growth rate to over 5 percent on sustained basis by overcoming structural challenges, says an IMF official. "There is no reason Pakistan can not grow over five percent on sustained basis by increasing exports and investments; all opportunities are there", said Masood Ahmed, IMF Director of Middle Eastern and Central Asian Division, in an exclusive interview with Business Recorder.

"To do so, Pakistan has to address impediments of increasing investment and to provide infrastructure, educated and skilled human capital, improve business environment, and level of governance", he said. "But in three to five years Pakistan, strongly growing on the structural reforms path, can also catch a growth rate of 8 percent, equal to its Asian rivals. That is also an average growth rate of Asia next year," he added.

Masood called for national consensus among all political parties on structural reforms so that in future these reforms should stay on course, and growth pattern should not be that much disturbed, and the government should show more political will in implementing these reforms. "Pakistan needs tough political decision to take on reforming its commercial entities, cutting its losses", Masood said.

Good macroeconomic practices to ensure strong pubic finances and competitive exchange rate to bolster high growth are also essential, he added. Pakistan grew 2 percent last year; has estimated to grow at 3 percent this year; and the Fund forecast to get to 4 percent next year. Unlike previous years' growth, based on consumption, future growth should be based on exports and investments.

In a scenario of growing global growth at 4 percent from negative 1 percent last year, exports demand would grow and competitive price advantage would support local exporters, making up for modest growth this year. "But, this is not enough, and Pakistan can achieve 8 percent of growth in coming years if structural reforms are really undertaken," the IMF Director said.

Pakistan government can save up to 8.5 percent of GDP to deploy from increasing tax revenue, and reduce losses of public sector inefficient enterprises. "Resources that are currently wasted in the loss, making public enterprises and taxes that are collecting taxes that are not collected, making public spending more efficient are estimated by Finance Ministry is over 8 percent of GDP which are almost $12 billion", says Masood, quoting Finance Ministry reports.

These resources could be deployed to finance the much-needed infrastructure, reliable electricity provision, better health and education for millions of Pakistanis, he added. Among other challenges, international oil prices can augment again next year posing balance of payments problems and inflation which had once come down to 9 percent. He said the government should also be reducing fiscal deficit, which is around 5 percent this year, that would crowed out private sector borrowing from banking sector.

"Inflation, once reduced to around 9 percent, is now again increasing, and rebounding at 13 percent, which is very harmful for the poor segment of the society. This is the biggest help for the poor class; this also helps increase investment, that ultimately helps reducing poverty," Masood said. He said help from donors, like Tokyo pledges, are slow, and IMF urges the donors to come up and support Pakistan, he added.

Pakistan is more urbanized with a larger middle class than India as percent of population. In 2007, Standard Chartered Bank analysts and SBP estimated there were 30 to 35 million Pakistanis earning more than $10,000 a year. Of these, about 17 million are in the upper and upper middle class, according to a recent report.

As to India's much hyped middle class, a new report by Nancy Birdsall of Center for Global Development says it is a myth. She has proposed a new definition of the middle class for developing countries in a forthcoming World Bank publication, Equity in a Globalizing World. Birdsall defines the middle class in the developing world to include people with an income above $10 day, but excluding the top 5% of that country. By this definition, India even urban India alone has no middle class; everyone at over $10 a day is in the top 5% of the country.

This is a combination both of the depth of India's poverty and its inequality. China had no middle class in 1990, but by 2005, had a small urban middle class (3% of the population). South Africa (7%), Russia (30%) and Brazil (19%) all had sizable middle classes in 2005.

A recent ODI report highlighting India's progress toward MDGs and putting India in the top 20.

Looking at the detailed report, however, it clearly highlights Pakistan along with China in the top 10 in achieving poverty reduction goal MDG1, the most important of MDGs. There is no mention of India on this list in table 4.

Here's an Express Tribune report on philanthropy doubling in Pakistan in the last decade:

KARACHI: Inflation is not the only thing that is on the rise. The amount contributed towards philanthropy in Pakistan has almost doubled over the past decade, said Anjum R Haque, Executive Director, Pakistan Centre for Philanthropy (PCP), an Islamabad-based organisation focussed on streamlining social development.

While a total of Rs70 billion had been donated in 2000, she said that the figure was likely to reach Rs140 billion this year. With donations carrying such a massive potential, she said, there is a growing need to make direct cash flows strategically.

She also spoke about the PCP certification programme under which 162 non-governmental organisations (NGOs) have been certified.

The PCP’s aim, she said, is to create awareness and sensitise society about current issues affecting growth in the social sector and create an enabling environment for the certified NGOs.

“Regularisation of NGOs is a very sensitive issue and the PCP tries to promote this culture through a voluntary approach,” she said.

Certification Manager Malik Babur Javed said that the certification programme was recognised by the government and was the country’s only system that reinforced and promoted internal governance, financial transparency and programme delivery in the non-profit sector.

He said that civil society organisations (CSO) certification not only created sector-wide standards but also promoted the government’s agenda of strengthening the civil society in terms of administration, documentation, disclosure, transparency, accountability and effective service delivery.

There are more poor people in 8 Indian states than all of Africa, according to a recent report. It is based on a new measure, called Multi-dimensional Poverty Index (MPI), that was developed and applied by the Oxford Poverty and Human Development Initiative with UNDP support.

Acute poverty prevails in eight Indian states, including Bihar, Uttar Pradesh and West Bengal, together accounting for more poor people than in the 26 poorest African nations combined, a new 'multidimensional' measure of global poverty has said.

The new measure, called the Multidimensional Poverty Index (MPI), was developed and applied by the Oxford Poverty and Human Development Initiative with UNDP support.

It will be featured in the forthcoming 20th anniversary edition of the UNDP Human Development Report.

An analysis by MPI creators reveals that there are more 'MPI poor' people in eight Indian states (421 million in Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and West Bengal) than in the 26 poorest African countries combined (410 million).

The new poverty measure that gives a multidimensional picture of people living in poverty, and is expected to help target development resources more effectively, its creators said.

Here is an excerpt from the World Bank blog on poverty reduction in Pakistan from 2000-2008:

A World Bank report released on July 30 finds that poverty in Pakistan fell by an impressive 17.3 percentage points between 2001 and 2008 (from 34.5 percent in 2001-02 to 17.2 percent in 2007-08). Three out of Pakistan’s four major provinces – Khyber Pakhtunkhwa (formerly NWFP), Punjab, and Sindh – saw significant declines in poverty during this period. The largest fall in poverty was in Khyber Pakhtunkhwa (KP). According to the Bank report “high level of remittances, both foreign and domestic, seem to have facilitated” the decline in poverty in KP.

Pakistan saw migrant remittances reach a record $ 8.9 billion in fiscal year 2010, an increase of 14 percent compared to the 2009 fiscal year despite the global economic crisis (Pakistan’s fiscal year runs from July to June). The World Bank report says “Continued strong growth in worker’s remittances in the past few years has also contributed to improvements in the external current account balance” and “have facilitated improvement in the country’s external position”.

Migration and remittances have provided a source of income for households in Khyber Pakhtunkhwa (KP) and other provinces in Pakistan. A recent Asian Development Bank study found that foreign remittances constituted 9.4 percent of household income in KP, compared to 5.1% for Punjab, 1.5% for Baluchistan, and 0.7% for Sindh.

There is now a risk that devastating floods that have hit Pakistan, killing more than 1,200 people and leaving 2 million people homeless, could reverse some of the gains in poverty achieved in the last few years, which were already believed to have been weakened in the wake of the recent financial crisis and rise in food prices.

During past natural disasters, migrants have sent additional remittances to help their families and friends in need – for example, during the Pakistan earthquake in 2005, in Philippines after typhoons Ondoy and Pepeng in 2009, after an earthquake in Haiti in early 2010, and in other countries in Asia, Africa and Latin America. It is likely that the Pakistani diaspora will send additional financial resources to help their family, friends and even larger communities. These person-to-person transfers could complement official aid efforts.

The official aid community and Pakistan’s government should welcome and facilitate the overseas Pakistanis’ help by quickly restoring the payments and financial infrastructure in affected areas, so that family members affected by the floods can continue to receive remittances. Some useful lessons can be learned from the example of the recent US-led efforts tokeep remittances flowing to Haiti after the earthquake in early 2010.

Here's a report in The News on the PPP's unwillingness to face rising poverty in Pakistan:

The World Bank has said that poverty assessment is underway in Pakistan, which will provide the basis for an update on poverty trends, sources said on Saturday.

But the government is making efforts to drag its feet away from revealing any poverty figures in a bid to avoid controversy, they said. In its latest report on Country Partnership Strategy (CPS), the World Bank took conscious decision to sticking the poverty figures of 17.2 percent on the basis of survey done in 2007/08.

The figure of 17.2 percent was not endorsed by the PPP-led government, despite validation extended by the World Bank, they said. There is a sharp divide among the economists over this issue as some are favouring to concede poverty figures validated by the World Bank, but some close to the incumbent regime are raising doubts about the credibility of the data compiled by the Federal Bureau of Statistics (FBS).

“There is a need to form high-powered committee with clear cut terms of reference to decide this matter once and for all,” the sources said, adding that the methodology of calculating poverty figures should also be analysed to update it in accordance with the ground realities. Now, the Federal Bureau of Statistics (FBS) has once again accomplished Pakistan Social and Living Standard Measurement (PSLM) Survey 2010/11. But the Planning Commission has not yet done analysis to come up with the latest poverty figures, the sources said.

However, the World Bank’s country partnership strategy report said that as reported there are indications that Pakistan saw an impressive decline in poverty trends during most years of the last decade, with the poverty rate falling from 34.5 percent in 2001/02 to an estimated 17.2 percent in 2007/08.

Over the last two years, the WB said, there have been signs that poverty levels may be rising, due to the downturn in the economy, floods and inflation. The rapid post-floods recovery in parts of the agriculture sector (those not hit by back-to-back floods), market price for wheat, and a surprisingly strong growth in remittances would likely to have benefitted the poorest (mainly rural) income groups, according to the report.

While Pakistan’s overall level of inequality remains steady and relatively low as compared to other developing countries, some of the volatile border regions and some rural areas within other provinces have a higher than average level of poverty, it said. Increased migration to the cities has also strained their capacity to deliver the much-needed basic services.

Clutching photocopied ID cards in bony fingers, a roomful of Pakistan's poorest women sit on gray plastic chairs and wait in silence for something many have never experienced: a little bit of help from the government.

It comes in the form of a debit card that is topped up with the equivalent of $30 every three months, enough to put an extra daily meal on the table, buy a school uniform or pay for medical treatment in a country where soaring food and fuel costs are hurting millions who already live hand-to-mouth.

The program is something of a success story for a government widely seen as corrupt and inefficient, as well as for international donors that help implement and fund it. But the very need for the scheme highlights the poverty stalking a country whose stability is seen as key to the fight against Islamist extremism.

Other cash-transfer programs in Pakistan have been plagued by graft and allegations that only supporters of the party in power received the funds. Many feared this program, named after Benazir Bhutto, the late wife of President Asif Ali Zardari, would go the same way.

But that hasn't happened, at least not significantly. The Benazir Income Support Programme is modeled on similar efforts in Africa and South America, part of a quiet revolution in the way countries and development agencies are helping the poor. Initial concerns that recipients would fritter away the money have proven unfounded, and giving cash is now accepted as a vital and cost-effective aid tool.

"I spend the money on my kids, what else would I do?" said Rifat Parveen, a mother of five who sometimes has to serve only bread and boiled chili peppers for the evening meal. "Even if a poor person gets 10 rupees (5 cents), he or she will be grateful."

When a woman is called, she goes to a room where her identity is checked against an electronic database and her thumb print taken electronically. A bank employee then gives her the card — and a crash course in how to use it — before she returns to her village.

As they do elsewhere in the world, women in Pakistan must receive the money on behalf of their families because research shows they spend it more responsibly than men do. They must also first obtain a valid identity card to be eligible. Both requirements have been credited with pushing women, discriminated against in Pakistan, a little into the mainstream.

Their biggest challenge at the moment is to explain how nearly seven million Pakistanis have come out of the vicious cycle of poverty.

According to the survey, the incidence of poverty has declined from 17.2 per cent in 2008 to slightly over 12 per cent in 2011. It was conducted by a committee constituted to calculate the incidence of poverty on the basis of Pakistan Social and Living Standards Measurement Survey 2010-11.

“The biggest challenge in front of us is how to explain this figure to the masses and economists when the economy grew at an average rate of 2.6 per cent and average inflation remained above 15 per cent during the last four years,” a member of the committee told The Express Tribune requesting anonymity due to political sensitivity attached to the figure.

He said poverty declined to slightly over 12 per cent with sharp declines in both rural and urban poverty. He said rural poverty declined more than urban poverty but, “the behaviour was the same and consistent with previous years’ results.”

In 2007-08 when the Pakistan Peoples Party-led coalition government took over, poverty had been assessed at 17.2 per cent. But the government decided not to release the figure saying poverty was at 35-40 per cent. It shared 40 per cent figure with Friends of Democratic Pakistan in its maiden meeting held in Tokyo.

It is facing the same dilemma exactly after four years, as its own people are now telling that poverty has declined to 12 per cent.

According to the United Nations Multi Dimensional Poverty Index, half of the country’s population lives below the poverty line.----------In 2007-08 the country’s estimated population was 164.7 million. By that account in 2008 as many as 28.3 million people lived below the poverty line. In 2010-11, the estimated population was 175.3 million and around 21.5 million people were in abject poverty.

The committee member said that poverty has been worked out on the basis of consumption method. According to this method, if a person takes 2,350 calories per day that costs him slightly over Rs1,700 per month that person is taken as above the poverty line.

The official said that the committee has not formally submitted the poverty report to the Planning Commission, but it is expected to submit the report over the next couple of weeks. However, the committee has already shared its findings with the commission.

A senior government official, who also wished to remain anonymous, said that the concerned authorities were considering the poverty figure and framing their mind whether to release it or not. It is not yet clear whether the government would publish the poverty estimates in the Economic Survey of Pakistan 2011-12.

The committee member, while giving justifications for the decline in poverty despite harsh ground realities, said that poverty declined because of higher support price of major crops, especially wheat, healthy trend in inflows of remittances and impact of assistance provided by both the government and private sectors in the flood affected areas of the country.

In the global search for poverty alleviation and sustainable development, Pakistan’s ‘Rural Support Programmes Network’ remains little known, yet offers enormous potential for the eradication of rural poverty across the world today.

The power of a collective community vision is what Pakistan's little known 'Rural Support Programmes Network' (RSPN) has used to empower rural communities to alleviate poverty. RSPN, Pakistan’s largest rural development NGO, is one of the most effective rural poverty alleviation models of the previous three decades. Yet its secret is surprisingly simple - community organizing.

The Network consists of eleven Rural Support Programmes, or RSPs. Founded in the early 1980’s, the Aga Khan Rural Support Programme (AKRSP) was created to improve agricultural productivity and raise incomes in poor, remote northern regions of Pakistan. Building on the success of AKRSP, other RSPs spread across the country, out of which came the birth of RSPN in 2000. -----------Since its inception, the model has received widespread international recognition. The World Bank's Independent Evaluation Group noted the RSPN's "impressive record of performance”. It has also been described as the NGO encapsulating one of 13 development ‘Ideas That Work’. Founding RSPN Chairman Shoaib Sultan Khan was nominated for Nobel Peace Prize for his work in "unleashing the power and potential of the poor". He has addressed the UN General Assembly to showcase RSPN's proven model of sustainable development.

Yet if the model is really so effective why has there not been an even greater transformation across rural Pakistan, especially given the high concentration of rural poverty? After all, the RSPN model has been widely replicated outside of Pakistan. In 1994, the UN Development Programme requested that RSPN Chairman Shoaib Sultan Khan set-up demonstration pilots of the model in Bangladesh, India, the Maldives, Nepal and Sri Lanka. The success of those pilots led India to subsequently launch a similar countrywide programme that benefited over 300 million poor.

One reason for this discrepancy lies in the very secret of RSPN's success; the RSPN model is an effective but long-term one, where significant results can only be gauged in the long-term over periods of more than a decade. As such, international aid agencies fail to provide the level of support RSPN needs to kick-start the crucial early stages of new programmes across different regions. These agencies have also failed to continue servicing current programmes before rural communities achieve some semblance of self-sufficiency.....

ISLAMABAD: Benazir Income Support Programme (BISP) has been a success story for the welfare of the people of Pakistan. Its various initiatives especially Emergency Relief Package (ERP) to help conflict ridden people in tribal areas and victims of terrorism has been a phenomenal step. This was declared by a delegation of journalists from leading newspapers of Indonesia during its meeting with Federal Minister and Chairperson BISP, Madame Farzana Raja in BISP secretariat. The journalists appreciated BISP’s performance and were of the view that the Programme’s success in the social sector of Pakistan has been an overwhelming experience for them. The Indonesian journalists said that the welfare of the people is the primary responsibility of the state and through BISP; Pakistan has been able to achieve this objective to a great extent.Madame Farzana Raja on the occasion informed Indonesian journalists that BISP has introduced Waseela-e-Haq (Right to Livelihood), Waseela-e-Rozgar (Right to Employment), Waseela-e-Sehet (Life and Health Insurance) and Waseela-e-Taleem (Right to Education) for its beneficiary families which are bringing sustainable economic growth in the society by empowering people from lower strata. Chairperson BISP said that BISP in the lights of the Millennium Development Goals of the UN is striving hard to provide basic health and education facilities to 7 million families. She said that the wellbeing of the people is the primary role of a welfare state. Federal Minister said that BISP is working for making Pakistan a progressive welfare state where most deserving families are provided ample opportunities to become self-reliant.

The new poverty line estimated the number of poor households at 6.8 million to 7.6 million. “So we are raising bar for ourselves. But we have decided to do so,” the minister said.Using 2013-14 data, the poverty headcount ratio comes out to be 29.5 percent of the population.In monetary terms, poverty line stands at Rs 3,030 per adult equivalent per month, the minister said.Under the old poverty line, the percentage of the poor fell by around 25 percentage points, from a high of 34.6 percent in 2001-02 to 9.3 percent in 2013-14.Further analysis of the past data under the new poverty line estimates the poverty headcount ratio at 63.3 percent in 2001-02, which has now fallen to 29.5 percent.“We needed to choose from reference group, measure of welfare (calories) and method,” the minister said, adding: “We have chosen 10-40 percent of distribution as reference group, 2,350 calories as minimum welfare measure and cost of basic needs as method.”The 2001 model of poverty measurement was based on food energy intake (FEI), which was not a representative one. To make it more transparent and coherent, the government has also incorporated costs of basic needs (CBN) for capturing non-food expenditures in the new formula.Non-food items will include expenditures on education, health and mobile phones. These will be added to basket for calculating the exact number of poor in the country.

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About Me

I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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